Genentech adjusts outlook, on target for 2010 goal

By Bill Berkrot

NEW YORK (Reuters) - Genentech Inc (DNA.N: Quote, Profile, Research) on Friday raised the lower end of its 2008 earnings forecast and said it was on track to meet or exceed its key financial and product development goals through 2010.

Wall Street, however, was not thrilled by the new forecast and Genentech shares were down $2.87 or 3.5 percent to $78.56 in afternoon trading.

The world's second-largest biotechnology company by sales said it now expects 2008 earnings excluding one-time items of between $3.35 per share and $3.45 per share, raising the low end by 5 cents.

"I think people were looking for something more aggressive than this," Christopher Raymond, an analyst for Robert W Baird, said of the forecast.

Genentech said it expects to achieve a compound annual earnings per share growth rate excluding items of at least 25 percent through 2010.

"People may be disappointed now, but they'll walk out of the meeting and say, 'they were just being conservative,'" predicted Ian Somaiya, analyst for Thomas Weisel Partners.

The company said it is considering expanding its share repurchases or initiating a dividend payment to shareholders as it begins to have more cash than needed to run the business, although no decision has yet been made.

Genentech expects this year to seek U.S. approval for its cancer drug Avastin as a treatment for relapsed brain cancer.